Japanese Preview

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echnicals Live Charts Analysis available from: Cornelius Luca J.P. Chorek=
Technical Research Ltd. Charts & News featuring Standard & Poor's =
Interest Rates US: Japan: Eurozone: UK: Switzerland: 1.75% 0.15% 3.=
25% 4.0% 1.25-2.25% [IMAGE] =09 [IMAGE] Japanese Forex Trading =
Preview January 21, 7:00 PM: EUR/$..0.8829 $/JPY..132.84 GBP/$..1.4351 $/CH=
F..1.6615 Japanese Forex Trading Preview by Darko Pavlovic No key data. =
In thin trading due to US holiday, market focus is shifting to a meeting be=
tween the US Treasury Secretary O'Neill and Japanese Finance Minister Shiok=
awa scheduled at 7:15 pm EST. Although traders do not expect the forex to b=
e the main topic of the conversation, some think that O'Neill might say som=
ething to approve the present government policy over weak yen. In yesterday=
's trading the BoJ published the minutes of their November 29 meeting, show=
ing members voted 8-1 to ease monetary policy. Moreover, a Japan MoF offici=
al urged debate on BoJ buying of foreign bonds as a way to weaken the yen. =
Given BoJ Governor Hayami's increasing concern with deflation, it is likely=
that the central bank could soon increase the money supply, allowing the y=
en to depreciate further. The number of Japanese corporate bankruptcies in =
2001 was the second highest since the 1945 while total liabilities fell 30.=
8% from the record high in 2000. The number of corporate failures last year=
jumped sharply after Mycal went bust and business sentiment deteriorated i=
n the wake of the terrorist attacks on the U.S. in September Japan's Financ=
ial System Minister Yanagisawa stressed PM's Koizumi's determination to tak=
e every possible measure to avoid volatility in the financial system during=
a Monday meeting with U.S. Treasury Secretary Paul O'Neill. During the mee=
ting, Yanagisawa told O'Neill that Japan now has a secure safety net, after=
going through the 1998 financial crisis. Yanagisawa also referred to a sys=
tem that allows the government to inject up to 15 trillion yen worth of pub=
lic funds in case of a financial crisis. Concerning the issue of bad-debt d=
isposals, Yanagisawa told O'Neill that the Japanese government aims to take=
final steps to separate bad loans from banks' assets in two to three years=
. Moody's announced Monday it has changed the rating outlook for 10 major J=
apanese banks from stable to negative, due to concerns over probable negati=
ve effects of the planned April abolition of the government's full guarante=
e on deposits at failed lenders. Finance Minister Shiokawa said Monday the =
government plans to avoid a deflationary spiral with a second supplementary=
budget for fiscal 2001, which is also aimed at speeding up the economic st=
ructural reform initiatives of PM Koizumi. In December the government compi=
led a package of economic programs worth 4.1 trillion yen ''to accelerate e=
conomic structural reform and avoid the economy's deterioration with increa=
sing speed along with continuing deflation . Support is seen at 132.0, 131.=
80 and 131.60. Resistance is eyed at 133.0 and 133.35. EUR/USD is trading =
around 88.30 weighed by the third straight fall in Eurozone industrial prod=
uction to -0.8% m/m in November from the previous -0.4%, or to -4.3% y/y vs=
. the previous -2.7% in its largest annual decline since July 1993. The dat=
a bodes poorly for Q4 GDP figures, and thus centers markets' focus on the E=
uropean Central Bank. German FinMin Eichel said that German budgetary defic=
it policy did not face any criticism on Monday's euro group meeting. Eurogr=
oup's Rato believed the ECB thought economic downturn scenario not too worr=
ying. Rato added that appropriate policies have been adopted to help recove=
ry. EU's Solbes said euro zone structural deficits would improve in 2002 an=
d 2003 while the euro zone CPI is likely to fall under 2% in Q1. Although t=
he Bundesbank's Welteke reiterated the ECB's insistence on keeping monetary=
policy unchanged, many analysts believe the ECB will lower rates by 50-bas=
is points over the next few months now that inflation has fallen to the 2% =
target rate. In addition, all ears will be tuned in to European Central Ban=
k President Duisenberg's testimony on Wednesday before the EU's Economic an=
d Monetary Affairs Committee for any hints about future interest rate cuts =
and the Eurozone economic outlook. Resistance is seen at 88.80, 89.50 and 9=
0.0. Support is viewed at 88.0, 87.50 and 87.0. The major event of this we=
ek will be Fed Chairman Greenspan's testimony before the Senate Budget Comm=
ittee on Thursday since markets are anxious to hear his remarks on the econ=
omy and any clues they might glean about the central bank's monetary policy=
. In particular, economists believe that Greenspan's testimony may also be =
supportive to the dollar following a report in the Washington post that acc=
ording to Fed sources, Greenspan "sounded more pessimistic than intended ab=
out the prospects for U.S. economic recovery". According to the sources, th=
e Fed Chairman is likely to comment more positively about the current state=
of the US economy, and therefore markets are now pricing in less than a 30=
% chance of a rate cut at the Jan 30 meeting, leaving the majority to belie=
ve rates will be held steady at a 40-year low of 1.75%. This week's other =
key US indicators include jobless claims and existing home sales. Fed Chair=
man Greenspan's testimony before the Senate Budget Committee will be the ma=
jor event of the week, with markets cautious to hear his remarks on the eco=
nomy. From the Eurozone, major data due for release consist of Euroarea for=
eign trade, HICP, French CPI, Italian industrial orders, Euroarea labor cos=
ts, German CPI, Italy's ISAE consumer confidence survey, ECB monthly bullet=
in, German PPI, Italian CPI, Italy's ISAE industrial confidence survey, Ita=
lian retail sales and Spanish PPI. Economic highlights from Japan comprise =
the trade balance, index of tertiary sector activity, corporate service pri=
ces and consumer prices. =09[IMAGE] Audio Mkt. Analysis Quiet Market Aw=
aits Data, USD Talk Articles & Ideas Philly Fed-Supported Optimism =
EUR/USD: Technical Analysis Articles & Ideas Forex Glossary Econo=
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